Humana Inc.
CEO : Mr. Bruce Dale Broussard
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 6.6% YoY | 34.6% | 42.9% | 2023-02-01 |
Susan Diamond says,
2022 Performance and Outlook
- Full year 2022 adjusted earnings per share of $25.24, representing a 22% YoY growth
- Quicker-than-anticipated return to above-market individual Medicare Advantage membership growth for 2023
- Improved operating performance in primary care organization and CenterWell platform
- Expectations of top-line growth above 11%, with consolidated revenues projected to be north of $103 billion
Insurance Segment Expectations
- Anticipate individual Medicare Advantage membership growth of at least $625,000 in 2023, a 13.7% increase YoY
- Net reduction of approximately 60,000 Group MA members, driven by the loss of a large group account
- Membership decline of approximately 800,000 members for 2023 in PDP business
- Anticipate total commercial medical membership to decline approximately 300,000 members in 2023
- Insurance segment revenue expected to be in a range of $99.5 billion to $101 billion, reflecting an increase of nearly 13% YoY
CenterWell Segment Expectations
- Expect EBITDA in the range of $1.3 billion to $1.45 billion for 2023, a slight decrease from 2022
- Projected admission growth for 2023 reflects a slight decline in fee-for-service Medicare admissions YoY
- Expect to expand coverage to approximately one million additional members by year-end 2023 in value-based home model
- Anticipate adding nearly 50 centers in 2023, an increase of approximately 20%
- Consolidated operating cost ratio in the range of 11.6% to 12.6% for 2023, a decrease of 100 basis points at the midpoint from the adjusted ratio of 13.1% in 2022
Investment Income and Interest Expense
- Anticipate investment income will increase approximately $450 million in 2023, resulting from the higher interest rate
Bruce Broussard says,
Financial Results and Guidance
- Adjusted earnings per share for the full year 2022 were $25.24, representing an annual growth of 22%.
- Full year adjusted EPS guidance for 2023 is at least $28, representing growth of 11% over 2022.
- Full year individual Medicare Advantage membership growth is expected to be at least 625,000 members, a 13.7% increase year-over-year.
- The 2025 adjusted EPS target of $37 is underpinned by an assumption of return to individual MA membership growth at or above the industry rate by 2024.
RADV Final Rule
- HUM supports CMS’ decision not to extrapolate the result of any audit payments for the years prior to 2018.
- HUM believes risk adjustment is an important element of the program and incentivizes plans to cover all individuals regardless of health status.
- HUM is committed to working productively with CMS to ensure the integrity of the program has maintained, and beneficiaries do not face higher costs.
Operations and Outlook
- 70% of Humana’s individual MA members are engaged in value-based arrangements.
- HUM added approximately 422,000 non-D-SNP members through 2023 AEP, representing an impressive 10% YoY growth in non-D-SNP membership.
- HUM experienced the strongest growth in states with robust or growing value-based provider penetration such as Texas, Georgia, Florida, and Illinois.
- HUM’s primary care organization is expected to add 8,000 to 10,000 new patients across its de novo and wholly-owned centers in 2023.
- HUM expects to grow patient panels by 20,000 to 25,000 through organic growth and programmatic M&A in 2023, which is meaningfully higher than the approximately 13,500 patient growth experienced in 2022.
- HUM is scheduled to open an additional 10 centers to 15 centers in the first quarter of 2023, and it expects to come in the high end of its previously communicated annual center growth of 30 centers to 50 centers.
Senior Leadership Appointments
- Dr. Sanjay Shetty is joining Humana as the President of CenterWell, effective April 1.
- George Renaudin has been promoted to President of Medicare and Medicaid and added to the management team effective immediately.
Q & A sessions,
Expected Impact on Humana’s Stock Movement Based on Q4 2022 Earnings Call Transcript:
- Impact of Audit Variation on Error Rates and Future Expectations: The inherent error rate within the Humana population is not expected to be meaningfully different from others. The audit selection and process could be reflective of the variation seen. The future error rate is dependent on the audit methodology and extrapolation that CMS ultimately defines.
- Trends in Error Rates Over Time: The growth in value-based provider penetration, increased activity within in-home assessments, and normal course activities undertaken by all health plans work to improve accuracy. Improvement is expected in these initiatives. However, the impact of provider claims is difficult to predict.
- 2024 Bidding Perspective: The 2024 bids are unlikely to be impacted, but the uncertainty regarding contract selection and audit methodologies will need to be assessed.
- Impact of Membership Mix on MLR: The higher retention rate and switchers from competitor MA plans are viewed positively, but the plan with meaningful Part B giveback is expected to attract an overall lower acuity membership, negatively impacting MLR. Members who switched to another Humana offering will see less contribution given the planned change that they initiated.
- Revenue Trends: Hospice divestiture will lead to a decline in revenue year-over-year, but the growth of the value-based model will drive meaningful revenue appreciation. The expected EBITDA contribution for the segment is down year-over-year, primarily due to the loss of the higher-margin hospice divestiture being replaced with the less mature value-based model contribution.
No bad stock 